Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify a Level 2 Subscriber Fee, 72740-72744 [2013-28845]
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Federal Register / Vol. 78, No. 232 / Tuesday, December 3, 2013 / Notices
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of NSCC and on NSCC’s Web site
(https://dtcc.com/legal/rule_filings/nscc/
2013.php).
All comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NSCC–2013–12 and should
be submitted on or before December 24,
2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–28846 Filed 12–2–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70945; File No. SR–
NASDAQ–2013–142]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify a
Level 2 Subscriber Fee
November 26, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
14, 2013, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by NASDAQ. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
emcdonald on DSK67QTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
NASDAQ proposes to modify the
NASDAQ Level 2 Professional
Subscriber fee set forth in NASDAQ
Rule 7023(b)(1)(B). NASDAQ will
implement the proposed revised fee on
January 1, 2014.
The text of the proposed rule change
is below. Proposed new language is in
7 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
17:36 Dec 02, 2013
7023. NASDAQ Depth-of-Book Data
(a) No change.
(b) Subscriber Fees.
(1) NASDAQ Level 2
(A) No change.
(B) Professional Subscribers pay a
monthly fee of $4[0]5 each for Display
Usage based upon Direct or Indirect
Access, or for Non-Display Usage based
upon Indirect Access only;
(C)–(E) No change.
(2)–(4) No change.
(c)–(e) No change.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASDAQ included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below.
NASDAQ has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NASDAQ is proposing a change to
modify the NASDAQ Level 2
Professional Subscriber fee (‘‘Level 2
fee’’) as set forth in NASDAQ Rule
7023(b)(1)(B). NASDAQ Rule
7023(b)(1)(B) currently provides for a
monthly fee of $40 for Professional
Subscribers each for any Display Usage
based upon Direct or Indirect Access, or
for Non-Display Usage based upon
Indirect Access only. Specifically,
NASDAQ proposes to increase this
display fee from $40 per month to $45
per month. NASDAQ Level 2 NonProfessional Subscriber fees will remain
unchanged.
The NASDAQ Level 2 product is
completely optional. NASDAQ has
enhanced this product through capacity
upgrades and regulatory data sets over
the last approximately 30 years, but has
only once increased the associated
3 Changes are marked to the rules of The
NASDAQ Stock Market LLC found at https://
NASDAQomx.cchwallstreet.com/.
1 15
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italics; proposed deletions are
bracketed.3
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Professional Subscriber fee.4 During this
time period, the network capacity for
NASDAQ Level 2 has increased from a
56 Kb feed in 1983 to the current 30 Mb
feed. Additionally, since NASDAQ
Level 2 is also used for market making
functions, NASDAQ has invested over
the years to add regulatory data sets,
such as Market Maker Mode and
Trading Action status. Such investments
are expected to continue in 2014 by the
addition of enhanced Symbol Directory
and IPO messaging, as well as latency
monitoring tools to the feed. Aside from
the one other Level 2 Subscriber fee
change previously mentioned, the only
other usage fee change NASDAQ has
made in the last approximately 30 years
was to add a Non-Professional fee
option for NASDAQ Level 2, which is
widely used by online brokerage firms
today. As noted above, this increase
represents only the second Professional
Subscriber price change for display
usage of NASDAQ Level 2 user fees
since its introduction in 1983.
b. Statutory Basis
NASDAQ believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,5 in
general, and with Section 6(b)(4) and
6(b)(5) of the Act,6 in particular, in that
it provides an equitable allocation of
reasonable fees among Subscribers and
recipients of NASDAQ data and is not
designed to permit unfair
discrimination between them. In
adopting Regulation NMS, the
Commission granted self-regulatory
organizations and broker-dealers
increased authority and flexibility to
offer new and unique market data to the
public. It was believed that this
authority would expand the amount of
data available to consumers, and also
spur innovation and competition for the
provision of market data.
The Commission concluded that
Regulation NMS—by lessening the
regulation of the market in proprietary
data—would itself further the Act’s
goals of facilitating efficiency and
competition:
[E]fficiency is promoted when brokerdealers who do not need the data beyond the
prices, sizes, market center identifications of
the NBBO and consolidated last sale
information are not required to receive (and
pay for) such data. The Commission also
believes that efficiency is promoted when
broker-dealers may choose to receive (and
pay for) additional market data based on their
4 See Securities Exchange Act Release No. 68493
(December 20, 2012), 77 FR 76574 (December 28,
2012) (SR–NASDAQ–2012–133).
5 15 U.S.C. 78f.
6 15 U.S.C. 78f(b)(4) and (5).
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own internal analysis of the need for such
data.7
By removing ‘‘unnecessary regulatory
restrictions’’ on the ability of exchanges
to sell their own data, Regulation NMS
advanced the goals of the Act and the
principles reflected in its legislative
history. If the free market should
determine whether proprietary data is
sold to broker-dealers (‘‘BDs’’) at all, it
follows that the price at which such
data is sold should be set by the market
as well. Level 2 is precisely the sort of
market data product that the
Commission envisioned when it
adopted Regulation NMS.
On July 21, 2010, President Barack
Obama signed into law H.R. 4173, the
Dodd- Frank Wall Street Reform and
Consumer Protection Act of 2010
(‘‘Dodd-Frank Act’’), which amended
Section 19 of the Act. Among other
things, Section 916 of the Dodd-Frank
Act amended paragraph (A) of Section
19(b)(3) of the Act by inserting the
phrase ‘‘on any person, whether or not
the person is a member of the selfregulatory organization’’ after ‘‘due, fee
or other charge imposed by the selfregulatory organization.’’ As a result, all
self-regulatory organization (‘‘SRO’’)
rule proposals establishing or changing
dues, fees, or other charges are
immediately effective upon filing
regardless of whether such dues, fees, or
other charges are imposed on members
of the SRO, non-members, or both.
Section 916 further amended paragraph
(C) of Section 19(b)(3) of the Act to read,
in pertinent part, ‘‘At any time within
the 60-day period beginning on the date
of filing of such a proposed rule change
in accordance with the provisions of
paragraph (1) [of Section 19(b)], the
Commission summarily may
temporarily suspend the change in the
rules of the self-regulatory organization
made thereby, if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of this title. If the Commission
takes such action, the Commission shall
institute proceedings under paragraph
(2)(B) [of Section 19(b)] to determine
whether the proposed rule should be
approved or disapproved.’’
The decision of the United States
Court of Appeals for the District of
Columbia Circuit in NetCoaliton v. SEC,
615 F.3d 525 (D.C. Cir. 2010)
(‘‘NetCoalition I’’), upheld the
Commission’s reliance upon
competitive markets to set reasonable
and equitably allocated fees for market
7 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
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data. ‘‘In fact, the legislative history
indicates that the Congress intended
that the market system ‘evolve through
the interplay of competitive forces as
unnecessary regulatory restrictions are
removed’ and that the SEC wield its
regulatory power ‘in those situations
where competition may not be
sufficient,’ such as in the creation of a
‘consolidated transactional reporting
system.’ NetCoaltion I, at 535 (quoting
H.R. Rep. No. 94–229, at 92 (1975), as
reprinted in 1975 U.S.C.C.A.N. 321,
323). The court agreed with the
Commission’s conclusion that
‘‘Congress intended that ‘competitive
forces should dictate the services and
practices that constitute the U.S.
national market system for trading
equity securities.’ ’’ 8
For the reasons stated above,
NASDAQ believes that the proposed fee
is fair and equitable in accordance with
Section 6(b)(4) of the Act, and not
unreasonably discriminatory in
accordance with Section 6(b)(5) of the
Act. As described above, the proposed
fee is based on pricing conventions and
distinctions that exist in NASDAQ’s
current fee schedule, and the fee
schedules of other exchanges. These
distinctions (top-of-book versus Depthof-Book, Professional versus nonProfessional Subscribers, Direct versus
Indirect Access, Internal versus External
Distribution) are each based on
principles of fairness and equity that
have helped for many years to maintain
fair, equitable, and not unreasonably
discriminatory fees, and that apply with
equal or greater force to the current
proposal.
As described in greater detail below,
if NASDAQ has calculated improperly
and the market deems the proposed fees
to be unfair, inequitable, or
unreasonably discriminatory, firms can
diminish or discontinue the use of their
data because the proposed product is
entirely optional to all parties. NASDAQ
can discontinue offering a pricing
alternative (as it has in the past) and
firms can discontinue their use at any
time and for any reason (as they often
do), including due to their assessment of
the reasonableness of fees charged.
NASDAQ continues to establish and
revise pricing policies aimed at
increasing fairness and equitable
allocation of fees among Subscribers.
NASDAQ believes that periodically it
must adjust the Depth-of-Book
Subscriber fees to reflect market forces.
Given that this fee change represents
only the second Professional Subscriber
price change for display usage of
NASDAQ Level 2 user fees since its
8 NetCoalition
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I, at 535.
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introduction in 1983, NASDAQ believes
it is an appropriate time to adjust this
fee to more accurately reflect the
investments made to enhance this
product through capacity upgrades and
regulatory data sets added. This also
reflects that the market for this Depthof-Book information is highly
competitive and continually evolves as
products develop and change.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
NASDAQ does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
Notwithstanding its determination that
the Commission may rely upon
competition to establish fair and
equitably allocated fees for market data,
the NetCoalition court found that the
Commission had not, in that case,
compiled a record that adequately
supported its conclusion that the market
for the data at issue in the case was
competitive. NASDAQ believes that a
record may readily be established to
demonstrate the competitive nature of
the market in question.
There is intense competition between
trading platforms that provide
transaction execution and routing
services and proprietary data products.
Transaction execution and proprietary
data products are complementary in that
market data is both an input and a
byproduct of the execution service. In
fact, market data and trade execution are
a paradigmatic example of joint
products with joint costs. The decision
whether and on which platform to post
an order will depend on the attributes
of the platform where the order can be
posted, including the execution fees,
data quality and price and distribution
of its data products. Without the
prospect of a taking order seeing and
reacting to a posted order on a particular
platform, the posting of the order would
accomplish little. Without trade
executions, exchange data products
cannot exist. Data products are valuable
to many end Subscribers only insofar as
they provide information that end
Subscribers expect will assist them or
their customers in making trading
decisions.
The costs of producing market data
include not only the costs of the data
distribution infrastructure, but also the
costs of designing, maintaining, and
operating the exchange’s transaction
execution platform and the cost of
regulating the exchange to ensure its fair
operation and maintain investor
confidence. The total return that a
trading platform earns reflects the
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revenues it receives from both products
and the joint costs it incurs. Moreover,
an exchange’s customers view the costs
of transaction executions and of data as
a unified cost of doing business with the
exchange. A broker-dealer will direct
orders to a particular exchange only if
the expected revenues from executing
trades on the exchange exceed net
transaction execution costs and the cost
of data that the broker-dealer chooses to
buy to support its trading decisions (or
those of its customers). The choice of
data products is, in turn, a product of
the value of the products in making
profitable trading decisions. If the cost
of the product exceeds its expected
value, the broker-dealer will choose not
to buy it. Moreover, as a broker-dealer
chooses to direct fewer orders to a
particular exchange, the value of the
product to that broker-dealer decreases,
for two reasons. First, the product will
contain less information, because
executions of the broker-dealer’s orders
will not be reflected in it. Second, and
perhaps more important, the product
will be less valuable to that brokerdealer because it does not provide
information about the venue to which it
is directing its orders. Data from the
competing venue to which the brokerdealer is directing orders will become
correspondingly more valuable.
Thus, an increase in the fees charged
for either transactions or data has the
potential to impair revenues from both
products. ‘‘No one disputes that
competition for order flow is ‘fierce’.’’
NetCoalition, at 24. However, the
existence of fierce competition for order
flow implies a high degree of price
sensitivity on the part of broker-dealers
with order flow, since they may readily
reduce costs by directing orders toward
the lowest-cost trading venues. A
broker-dealer that shifted its order flow
from one platform to another in
response to order execution price
differentials would both reduce the
value of that platform’s market data and
reduce its own need to consume data
from the disfavored platform. Similarly,
if a platform increases its market data
fees, the change will affect the overall
cost of doing business with the
platform, and affected broker-dealers
will assess whether they can lower their
trading costs by directing orders
elsewhere and thereby lessening the
need for the more expensive data.
Analyzing the cost of market data
distribution in isolation from the cost of
all of the inputs supporting the creation
of market data will inevitably
underestimate the cost of the data. Thus,
because it is impossible to create data
without a fast, technologically robust,
and well-regulated execution system,
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system costs and regulatory costs affect
the price of market data. It would be
equally misleading, however, to
attribute all of the exchange’s costs to
the market data portion of an exchange’s
joint product. Rather, all of the
exchange’s costs are incurred for the
unified purposes of attracting order
flow, executing and/or routing orders,
and generating and selling data about
market activity. The total return that an
exchange earns reflects the revenues it
receives from the joint products and the
total costs of the joint products.
Competition among trading platforms
can be expected to constrain the
aggregate return each platform earns
from the sale of its joint products, but
different platforms may choose from a
range of possible, and equally
reasonable, pricing strategies as the
means of recovering total costs. For
example, some platforms may choose to
pay rebates to attract orders, charge
relatively low prices for market
information (or provide information free
of charge) and charge relatively high
prices for accessing posted liquidity.
Other platforms may choose a strategy
of paying lower rebates (or no rebates)
to attract orders, setting relatively high
prices for market information, and
setting relatively low prices for
accessing posted liquidity. In this
environment, there is no economic basis
for regulating maximum prices for one
of the joint products in an industry in
which suppliers face competitive
constraints with regard to the joint
offering. This would be akin to strictly
regulating the price that an automobile
manufacturer can charge for car sound
systems despite the existence of a highly
competitive market for cars and the
availability of after-market alternatives
to the manufacturer-supplied system.
The market for market data products
is competitive and inherently
contestable because there is fierce
competition for the inputs necessary to
the creation of proprietary data and
strict pricing discipline for the
proprietary products themselves.
Numerous exchanges compete with
each other for listings, trades, and
market data itself, providing virtually
limitless opportunities for entrepreneurs
who wish to produce and distribute
their own market data. This proprietary
data is produced by each individual
exchange, as well as other entities, in a
vigorously competitive market.
Broker-dealers currently have
numerous alternative venues for their
order flow, including thirteen SRO
markets, as well as internalizing BDs
and various forms of alternative trading
systems (‘‘ATSs’’), including dark pools
and electronic communication networks
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(‘‘ECNs’’). Each SRO market competes to
produce transaction reports via trade
executions, and two FINRA-regulated
Trade Reporting Facilities (‘‘TRFs’’)
compete to attract internalized
transaction reports. Competitive markets
for order flow, executions, and
transaction reports provide pricing
discipline for the inputs of proprietary
data products.
The large number of SROs, TRFs, BDs,
and ATSs that currently produce
proprietary data or are currently capable
of producing it provides further pricing
discipline for proprietary data products.
Each SRO, TRF, ATS, and BD is
currently permitted to produce
proprietary data products, and many
currently do or have announced plans to
do so, including NASDAQ, New York
Stock Exchange LLC (‘‘NYSE’’), NYSE
MKT LLC, NYSE Arca LLC, BATS
Exchange, Inc. (‘‘BATS’’) and Direct
Edge.
Any ATS or BD can combine with any
other ATS, BD, or multiple ATSs or BDs
to produce joint proprietary data
products. Additionally, order routers
and market data vendors can facilitate
single or multiple broker-dealers’
production of proprietary data products.
The potential sources of proprietary
products are virtually limitless.
The fact that proprietary data from
ATSs, BDs, and vendors can by-pass
SROs is significant in two respects.
First, non-SROs can compete directly
with SROs for the production and sale
of proprietary data products, as BATS
and Arca did before registering as
exchanges by publishing Depth-of-Book
data on the Internet. Second, because a
single order or transaction report can
appear in an SRO proprietary product,
a non-SRO proprietary product, or both,
the data available in proprietary
products is exponentially greater than
the actual number of orders and
transaction reports that exist in the
marketplace.
Market data vendors provide another
form of price discipline for proprietary
data products because they control the
primary means of access to end
Subscribers. Vendors impose price
restraints based upon their business
models. For example, vendors such as
Bloomberg and Thomson Reuters that
assess a surcharge on data they sell may
refuse to offer proprietary products that
end Subscribers will not purchase in
sufficient numbers. Internet portals,
such as Google, impose a discipline by
providing only data that will enable
them to attract ‘‘eyeballs’’ that
contribute to their advertising revenue.
Retail broker-dealers, such as Schwab
and Fidelity, offer their customers
proprietary data only if it promotes
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trading and generates sufficient
commission revenue. Although the
business models may differ, these
vendors’ pricing discipline is the same:
they can simply refuse to purchase any
proprietary data product that fails to
provide sufficient value. NASDAQ and
other producers of proprietary data
products must understand and respond
to these varying business models and
pricing disciplines in order to market
proprietary data products successfully.
In addition to the competition and
price discipline described above, the
market for proprietary data products is
also highly contestable because market
entry is rapid, inexpensive, and
profitable. The history of electronic
trading is replete with examples of
entrants that swiftly grew into some of
the largest electronic trading platforms
and proprietary data producers:
Archipelago, Bloomberg Tradebook,
Island, RediBook, Attain, TracECN,
BATS Trading and Direct Edge. A
proliferation of dark pools and other
ATSs operate profitably with
fragmentary shares of consolidated
market volume.
Regulation NMS, by deregulating the
market for proprietary data, has
increased the contestability of that
market. While broker-dealers have
previously published their proprietary
data individually, Regulation NMS
encourages market data vendors and
broker-dealers to produce proprietary
products cooperatively in a manner
never before possible. Multiple market
data vendors already have the capability
to aggregate data and disseminate it on
a profitable scale, including Bloomberg,
and Thomson Reuters.
The court in NetCoalition concluded
that the Commission had failed to
demonstrate that the market for market
data was competitive based on the
reasoning of the Commission’s
NetCoalition order because, in the
court’s view, the Commission had not
adequately demonstrated that the
Depth-of-Book data at issue in the case
is used to attract order flow. NASDAQ
believes, however, that evidence not
before the court clearly demonstrates
that availability of data attracts order
flow.
Competition among platforms has
driven NASDAQ continually to improve
its platform data offerings and to cater
to customers’ data needs. For example,
NASDAQ has developed and
maintained multiple delivery
mechanisms (IP, multi-cast, and
compression) that enable customers to
receive data in the form and manner
they prefer and at the lowest cost to
them. NASDAQ offers front end
applications such as its ‘‘Bookviewer’’
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to help customers utilize data. NASDAQ
has created new products like
TotalView Aggregate to complement
TotalView ITCH and/Level 2, because
offering data in multiple formatting
allows NASDAQ to better fit customer
needs. NASDAQ offers data via multiple
extranet providers, thereby helping to
reduce network and total cost for its
data products. NASDAQ has developed
an online administrative system to
provide customers transparency into
their data feed requests and streamline
data usage reporting. NASDAQ has also
expanded its Enterprise License options
that reduce the administrative burden
and costs to firms that purchase market
data.
Despite these enhancements and a
dramatic increase in message traffic,
NASDAQ’s fees for market data have
remained flat. In fact, as a percent of
total Subscriber costs, NASDAQ data
fees have fallen relative to other data
usage costs—including bandwidth,
programming, and infrastructure—that
have risen. The same holds true for
execution services; despite numerous
enhancements to NASDAQ’s trading
platform, absolute and relative trading
costs have declined. Platform
competition has intensified as new
entrants have emerged, constraining
prices for both executions and for data.
The vigor of competition for Depth-ofBook information is significant and the
Exchange believes that this proposal
itself clearly evidences such
competition. NASDAQ is increasing the
fee in order to keep pace with changes
in the industry and evolving customer
needs. This product is entirely optional
and is geared towards attracting new
customers, as well as retaining existing
customers.
The Exchange has witnessed
competitors creating new products and
innovative pricing in this space over the
course of the past year. NASDAQ
continues to see firms challenge its
pricing on the basis of the Exchange’s
explicit fees being higher than the zeropriced fees from other competitors such
as BATS. In all cases, firms make
decisions on how much and what types
of data to consume on the basis of the
total cost of interacting with NASDAQ
or other exchanges. Of course, the
explicit data fees are but one factor in
a total platform analysis. Some
competitors have lower transactions fees
and higher data fees, and others are vice
versa. The market for this Depth-of-Book
information is highly competitive and
continually evolves as products develop
and change.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.9 At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2013–142 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2013–142. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
9 15
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U.S.C. 78s(b)(3)(a)(ii).
03DEN1
72744
Federal Register / Vol. 78, No. 232 / Tuesday, December 3, 2013 / Notices
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room on official business
days between the hours of 10:00 a.m.
and 3:00 p.m. Copies of such filing also
will be available for inspection and
copying at the principal offices of the
Exchange. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2013–142, and should be
submitted on or before December 24,
2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–28845 Filed 12–2–13; 8:45 am]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
Agency Information Collection
Activities: Proposed Request and
Comment Request
The Social Security Administration
(SSA) publishes a list of information
collection packages requiring clearance
by the Office of Management and
Budget (OMB) in compliance with
Public Law 104–13, the Paperwork
Reduction Act of 1995, effective October
1, 1995. This notice includes revisions
of OMB-approved information
collections.
SSA is soliciting comments on the
accuracy of the agency’s burden
estimate; the need for the information;
its practical utility; ways to enhance its
quality, utility, and clarity; and ways to
minimize burden on respondents,
including the use of automated
collection techniques or other forms of
information technology. Mail, email, or
fax your comments and
recommendations on the information
collection(s) to the OMB Desk Officer
and SSA Reports Clearance Officer at
the following addresses or fax numbers.
(OMB) Office of Management and
Budget, Attn: Desk Officer for SSA,
Fax: 202–395–6974, Email address:
OIRA_Submission@omb.eop.gov.
(SSA) Social Security Administration,
OLCA, Attn: Reports Clearance
Director, 3100 West High Rise, 6401
Security Blvd., Baltimore, MD 21235,
Fax: 410–966–2830, Email address:
OR.Reports.Clearance@ssa.gov.
I. The information collection below is
pending at SSA. SSA will submit it to
OMB within 60 days from the date of
this notice. To be sure we consider your
comments, we must receive them no
later n February 3, 2014. Individuals can
obtain copies of the collection
instruments by writing to the above
email address.
Petition to Obtain Approval of a Fee
for Representing a Claimant Before the
Social Security Administration—20 CFR
404.1720 and 404.1725; 20 CFR
416.1520 and 416.1525—0960–0104.
SSA attorney and non-attorney claimant
representatives use Form SSA–1560–U4
to petition SSA for authorization to
charge and collect a fee. Claimants may
also use this form to agree with or
contest the requested fee amount or
other information the representative
provided on the form. SSA officials use
the form to determine a reasonable fee
amount representatives may charge for
their services. The respondents are
attorneys and non-attorneys who
represent Social Security claimants and
their claimants.
Type of Request: Revision of an OMBapproved information collection.
Modality of completion
Number of
respondents
Frequency of
response
Average
burden
per response
(minutes)
Estimated total
annual burden
(hours)
SSA–1560–U4 .................................................................................................
48,110
1
30
24,055
emcdonald on DSK67QTVN1PROD with NOTICES
II. SSA submitted the information
collections below to OMB for clearance.
Your comments regarding the
information collections would be most
useful if OMB and SSA receive them 30
days from the date of this publication.
To be sure we consider your comments,
we must receive them no later than
January 2, 2014. Individuals can obtain
copies of the OMB clearance packages
by writing to OR.Reports.Clearance@
ssa.gov.
1. Continuing Disability Review
Report—20 CFR 404.1589, 416.989—
0960–0072. Sections 221(i),
1614(a)(3)(H)(ii)(I), and 1633(c)(1) of the
Social Security Act require SSA to
periodically review the cases of
individuals who receive disability
benefits under Title II or Title XVI to
determine if the individuals’ disabilities
continue. SSA uses Form SSA–454,
Continuing Disability Review Report, to
complete the review for continuing
disability. SSA considers adults eligible
for payment if they continue to be
unable to do substantial gainful activity
because of their impairments, and we
Number of
respondents
Modality of completion
SSA–454–BK (Paper version) .........................................................................
Electronic Disability Collect System ................................................................
10 17
consider Title XVI children eligible for
payment if they have marked and severe
functional limitations because of their
impairments. SSA also uses Form SSA–
454 to obtain information on sources of
medical treatment; participation in
vocational rehabilitation programs (if
any); attempts to work (if any); and if
individuals believe their conditions
have improved. The respondents are
Title II or Title XVI disability recipients
or their representatives.
Type of Request: Revision of an OMBapproved information collection.
Frequency of
response
270,500
270,500
1
1
CFR 200.30–3(a)(12).
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18:56 Dec 02, 2013
Jkt 232001
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
E:\FR\FM\03DEN1.SGM
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Average
burden per
response
(minutes)
60
60
Estimated total
annual burden
(hours)
270,500
270,500
]]>Agencies
[Federal Register Volume 78, Number 232 (Tuesday, December 3, 2013)]
[Notices]
[Pages 72740-72744]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-28845]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70945; File No. SR-NASDAQ-2013-142]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify a Level 2 Subscriber Fee
November 26, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 14, 2013, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by NASDAQ. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
NASDAQ proposes to modify the NASDAQ Level 2 Professional
Subscriber fee set forth in NASDAQ Rule 7023(b)(1)(B). NASDAQ will
implement the proposed revised fee on January 1, 2014.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are bracketed.\3\
---------------------------------------------------------------------------
\3\ Changes are marked to the rules of The NASDAQ Stock Market
LLC found at https://NASDAQomx.cchwallstreet.com/.
---------------------------------------------------------------------------
* * * * *
7023. NASDAQ Depth-of-Book Data
(a) No change.
(b) Subscriber Fees.
(1) NASDAQ Level 2
(A) No change.
(B) Professional Subscribers pay a monthly fee of $4[0]5 each for
Display Usage based upon Direct or Indirect Access, or for Non-Display
Usage based upon Indirect Access only;
(C)-(E) No change.
(2)-(4) No change.
(c)-(e) No change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASDAQ included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. NASDAQ has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ is proposing a change to modify the NASDAQ Level 2
Professional Subscriber fee (``Level 2 fee'') as set forth in NASDAQ
Rule 7023(b)(1)(B). NASDAQ Rule 7023(b)(1)(B) currently provides for a
monthly fee of $40 for Professional Subscribers each for any Display
Usage based upon Direct or Indirect Access, or for Non-Display Usage
based upon Indirect Access only. Specifically, NASDAQ proposes to
increase this display fee from $40 per month to $45 per month. NASDAQ
Level 2 Non-Professional Subscriber fees will remain unchanged.
The NASDAQ Level 2 product is completely optional. NASDAQ has
enhanced this product through capacity upgrades and regulatory data
sets over the last approximately 30 years, but has only once increased
the associated Professional Subscriber fee.\4\ During this time period,
the network capacity for NASDAQ Level 2 has increased from a 56 Kb feed
in 1983 to the current 30 Mb feed. Additionally, since NASDAQ Level 2
is also used for market making functions, NASDAQ has invested over the
years to add regulatory data sets, such as Market Maker Mode and
Trading Action status. Such investments are expected to continue in
2014 by the addition of enhanced Symbol Directory and IPO messaging, as
well as latency monitoring tools to the feed. Aside from the one other
Level 2 Subscriber fee change previously mentioned, the only other
usage fee change NASDAQ has made in the last approximately 30 years was
to add a Non-Professional fee option for NASDAQ Level 2, which is
widely used by online brokerage firms today. As noted above, this
increase represents only the second Professional Subscriber price
change for display usage of NASDAQ Level 2 user fees since its
introduction in 1983.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 68493 (December 20,
2012), 77 FR 76574 (December 28, 2012) (SR-NASDAQ-2012-133).
---------------------------------------------------------------------------
b. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\5\ in general, and with Section
6(b)(4) and 6(b)(5) of the Act,\6\ in particular, in that it provides
an equitable allocation of reasonable fees among Subscribers and
recipients of NASDAQ data and is not designed to permit unfair
discrimination between them. In adopting Regulation NMS, the Commission
granted self-regulatory organizations and broker-dealers increased
authority and flexibility to offer new and unique market data to the
public. It was believed that this authority would expand the amount of
data available to consumers, and also spur innovation and competition
for the provision of market data.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Commission concluded that Regulation NMS--by lessening the
regulation of the market in proprietary data--would itself further the
Act's goals of facilitating efficiency and competition:
[E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to
receive (and pay for) such data. The Commission also believes that
efficiency is promoted when broker-dealers may choose to receive
(and pay for) additional market data based on their
[[Page 72741]]
own internal analysis of the need for such data.\7\
---------------------------------------------------------------------------
\7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496 (June 29, 2005).
By removing ``unnecessary regulatory restrictions'' on the ability
of exchanges to sell their own data, Regulation NMS advanced the goals
of the Act and the principles reflected in its legislative history. If
the free market should determine whether proprietary data is sold to
broker-dealers (``BDs'') at all, it follows that the price at which
such data is sold should be set by the market as well. Level 2 is
precisely the sort of market data product that the Commission
envisioned when it adopted Regulation NMS.
On July 21, 2010, President Barack Obama signed into law H.R. 4173,
the Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010
(``Dodd-Frank Act''), which amended Section 19 of the Act. Among other
things, Section 916 of the Dodd-Frank Act amended paragraph (A) of
Section 19(b)(3) of the Act by inserting the phrase ``on any person,
whether or not the person is a member of the self-regulatory
organization'' after ``due, fee or other charge imposed by the self-
regulatory organization.'' As a result, all self-regulatory
organization (``SRO'') rule proposals establishing or changing dues,
fees, or other charges are immediately effective upon filing regardless
of whether such dues, fees, or other charges are imposed on members of
the SRO, non-members, or both. Section 916 further amended paragraph
(C) of Section 19(b)(3) of the Act to read, in pertinent part, ``At any
time within the 60-day period beginning on the date of filing of such a
proposed rule change in accordance with the provisions of paragraph (1)
[of Section 19(b)], the Commission summarily may temporarily suspend
the change in the rules of the self-regulatory organization made
thereby, if it appears to the Commission that such action is necessary
or appropriate in the public interest, for the protection of investors,
or otherwise in furtherance of the purposes of this title. If the
Commission takes such action, the Commission shall institute
proceedings under paragraph (2)(B) [of Section 19(b)] to determine
whether the proposed rule should be approved or disapproved.''
The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoaliton v. SEC, 615 F.3d 525 (D.C. Cir.
2010) (``NetCoalition I''), upheld the Commission's reliance upon
competitive markets to set reasonable and equitably allocated fees for
market data. ``In fact, the legislative history indicates that the
Congress intended that the market system `evolve through the interplay
of competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.'
NetCoaltion I, at 535 (quoting H.R. Rep. No. 94-229, at 92 (1975), as
reprinted in 1975 U.S.C.C.A.N. 321, 323). The court agreed with the
Commission's conclusion that ``Congress intended that `competitive
forces should dictate the services and practices that constitute the
U.S. national market system for trading equity securities.' '' \8\
---------------------------------------------------------------------------
\8\ NetCoalition I, at 535.
---------------------------------------------------------------------------
For the reasons stated above, NASDAQ believes that the proposed fee
is fair and equitable in accordance with Section 6(b)(4) of the Act,
and not unreasonably discriminatory in accordance with Section 6(b)(5)
of the Act. As described above, the proposed fee is based on pricing
conventions and distinctions that exist in NASDAQ's current fee
schedule, and the fee schedules of other exchanges. These distinctions
(top-of-book versus Depth-of-Book, Professional versus non-Professional
Subscribers, Direct versus Indirect Access, Internal versus External
Distribution) are each based on principles of fairness and equity that
have helped for many years to maintain fair, equitable, and not
unreasonably discriminatory fees, and that apply with equal or greater
force to the current proposal.
As described in greater detail below, if NASDAQ has calculated
improperly and the market deems the proposed fees to be unfair,
inequitable, or unreasonably discriminatory, firms can diminish or
discontinue the use of their data because the proposed product is
entirely optional to all parties. NASDAQ can discontinue offering a
pricing alternative (as it has in the past) and firms can discontinue
their use at any time and for any reason (as they often do), including
due to their assessment of the reasonableness of fees charged. NASDAQ
continues to establish and revise pricing policies aimed at increasing
fairness and equitable allocation of fees among Subscribers.
NASDAQ believes that periodically it must adjust the Depth-of-Book
Subscriber fees to reflect market forces. Given that this fee change
represents only the second Professional Subscriber price change for
display usage of NASDAQ Level 2 user fees since its introduction in
1983, NASDAQ believes it is an appropriate time to adjust this fee to
more accurately reflect the investments made to enhance this product
through capacity upgrades and regulatory data sets added. This also
reflects that the market for this Depth-of-Book information is highly
competitive and continually evolves as products develop and change.
B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. Notwithstanding its
determination that the Commission may rely upon competition to
establish fair and equitably allocated fees for market data, the
NetCoalition court found that the Commission had not, in that case,
compiled a record that adequately supported its conclusion that the
market for the data at issue in the case was competitive. NASDAQ
believes that a record may readily be established to demonstrate the
competitive nature of the market in question.
There is intense competition between trading platforms that provide
transaction execution and routing services and proprietary data
products. Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, market data and trade execution are a
paradigmatic example of joint products with joint costs. The decision
whether and on which platform to post an order will depend on the
attributes of the platform where the order can be posted, including the
execution fees, data quality and price and distribution of its data
products. Without the prospect of a taking order seeing and reacting to
a posted order on a particular platform, the posting of the order would
accomplish little. Without trade executions, exchange data products
cannot exist. Data products are valuable to many end Subscribers only
insofar as they provide information that end Subscribers expect will
assist them or their customers in making trading decisions.
The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. The total return that a
trading platform earns reflects the
[[Page 72742]]
revenues it receives from both products and the joint costs it incurs.
Moreover, an exchange's customers view the costs of transaction
executions and of data as a unified cost of doing business with the
exchange. A broker-dealer will direct orders to a particular exchange
only if the expected revenues from executing trades on the exchange
exceed net transaction execution costs and the cost of data that the
broker-dealer chooses to buy to support its trading decisions (or those
of its customers). The choice of data products is, in turn, a product
of the value of the products in making profitable trading decisions. If
the cost of the product exceeds its expected value, the broker-dealer
will choose not to buy it. Moreover, as a broker-dealer chooses to
direct fewer orders to a particular exchange, the value of the product
to that broker-dealer decreases, for two reasons. First, the product
will contain less information, because executions of the broker-
dealer's orders will not be reflected in it. Second, and perhaps more
important, the product will be less valuable to that broker-dealer
because it does not provide information about the venue to which it is
directing its orders. Data from the competing venue to which the
broker-dealer is directing orders will become correspondingly more
valuable.
Thus, an increase in the fees charged for either transactions or
data has the potential to impair revenues from both products. ``No one
disputes that competition for order flow is `fierce'.'' NetCoalition,
at 24. However, the existence of fierce competition for order flow
implies a high degree of price sensitivity on the part of broker-
dealers with order flow, since they may readily reduce costs by
directing orders toward the lowest-cost trading venues. A broker-dealer
that shifted its order flow from one platform to another in response to
order execution price differentials would both reduce the value of that
platform's market data and reduce its own need to consume data from the
disfavored platform. Similarly, if a platform increases its market data
fees, the change will affect the overall cost of doing business with
the platform, and affected broker-dealers will assess whether they can
lower their trading costs by directing orders elsewhere and thereby
lessening the need for the more expensive data.
Analyzing the cost of market data distribution in isolation from
the cost of all of the inputs supporting the creation of market data
will inevitably underestimate the cost of the data. Thus, because it is
impossible to create data without a fast, technologically robust, and
well-regulated execution system, system costs and regulatory costs
affect the price of market data. It would be equally misleading,
however, to attribute all of the exchange's costs to the market data
portion of an exchange's joint product. Rather, all of the exchange's
costs are incurred for the unified purposes of attracting order flow,
executing and/or routing orders, and generating and selling data about
market activity. The total return that an exchange earns reflects the
revenues it receives from the joint products and the total costs of the
joint products.
Competition among trading platforms can be expected to constrain
the aggregate return each platform earns from the sale of its joint
products, but different platforms may choose from a range of possible,
and equally reasonable, pricing strategies as the means of recovering
total costs. For example, some platforms may choose to pay rebates to
attract orders, charge relatively low prices for market information (or
provide information free of charge) and charge relatively high prices
for accessing posted liquidity. Other platforms may choose a strategy
of paying lower rebates (or no rebates) to attract orders, setting
relatively high prices for market information, and setting relatively
low prices for accessing posted liquidity. In this environment, there
is no economic basis for regulating maximum prices for one of the joint
products in an industry in which suppliers face competitive constraints
with regard to the joint offering. This would be akin to strictly
regulating the price that an automobile manufacturer can charge for car
sound systems despite the existence of a highly competitive market for
cars and the availability of after-market alternatives to the
manufacturer-supplied system.
The market for market data products is competitive and inherently
contestable because there is fierce competition for the inputs
necessary to the creation of proprietary data and strict pricing
discipline for the proprietary products themselves. Numerous exchanges
compete with each other for listings, trades, and market data itself,
providing virtually limitless opportunities for entrepreneurs who wish
to produce and distribute their own market data. This proprietary data
is produced by each individual exchange, as well as other entities, in
a vigorously competitive market.
Broker-dealers currently have numerous alternative venues for their
order flow, including thirteen SRO markets, as well as internalizing
BDs and various forms of alternative trading systems (``ATSs''),
including dark pools and electronic communication networks (``ECNs'').
Each SRO market competes to produce transaction reports via trade
executions, and two FINRA-regulated Trade Reporting Facilities
(``TRFs'') compete to attract internalized transaction reports.
Competitive markets for order flow, executions, and transaction reports
provide pricing discipline for the inputs of proprietary data products.
The large number of SROs, TRFs, BDs, and ATSs that currently
produce proprietary data or are currently capable of producing it
provides further pricing discipline for proprietary data products. Each
SRO, TRF, ATS, and BD is currently permitted to produce proprietary
data products, and many currently do or have announced plans to do so,
including NASDAQ, New York Stock Exchange LLC (``NYSE''), NYSE MKT LLC,
NYSE Arca LLC, BATS Exchange, Inc. (``BATS'') and Direct Edge.
Any ATS or BD can combine with any other ATS, BD, or multiple ATSs
or BDs to produce joint proprietary data products. Additionally, order
routers and market data vendors can facilitate single or multiple
broker-dealers' production of proprietary data products. The potential
sources of proprietary products are virtually limitless.
The fact that proprietary data from ATSs, BDs, and vendors can by-
pass SROs is significant in two respects. First, non-SROs can compete
directly with SROs for the production and sale of proprietary data
products, as BATS and Arca did before registering as exchanges by
publishing Depth-of-Book data on the Internet. Second, because a single
order or transaction report can appear in an SRO proprietary product, a
non-SRO proprietary product, or both, the data available in proprietary
products is exponentially greater than the actual number of orders and
transaction reports that exist in the marketplace.
Market data vendors provide another form of price discipline for
proprietary data products because they control the primary means of
access to end Subscribers. Vendors impose price restraints based upon
their business models. For example, vendors such as Bloomberg and
Thomson Reuters that assess a surcharge on data they sell may refuse to
offer proprietary products that end Subscribers will not purchase in
sufficient numbers. Internet portals, such as Google, impose a
discipline by providing only data that will enable them to attract
``eyeballs'' that contribute to their advertising revenue. Retail
broker-dealers, such as Schwab and Fidelity, offer their customers
proprietary data only if it promotes
[[Page 72743]]
trading and generates sufficient commission revenue. Although the
business models may differ, these vendors' pricing discipline is the
same: they can simply refuse to purchase any proprietary data product
that fails to provide sufficient value. NASDAQ and other producers of
proprietary data products must understand and respond to these varying
business models and pricing disciplines in order to market proprietary
data products successfully.
In addition to the competition and price discipline described
above, the market for proprietary data products is also highly
contestable because market entry is rapid, inexpensive, and profitable.
The history of electronic trading is replete with examples of entrants
that swiftly grew into some of the largest electronic trading platforms
and proprietary data producers: Archipelago, Bloomberg Tradebook,
Island, RediBook, Attain, TracECN, BATS Trading and Direct Edge. A
proliferation of dark pools and other ATSs operate profitably with
fragmentary shares of consolidated market volume.
Regulation NMS, by deregulating the market for proprietary data,
has increased the contestability of that market. While broker-dealers
have previously published their proprietary data individually,
Regulation NMS encourages market data vendors and broker-dealers to
produce proprietary products cooperatively in a manner never before
possible. Multiple market data vendors already have the capability to
aggregate data and disseminate it on a profitable scale, including
Bloomberg, and Thomson Reuters.
The court in NetCoalition concluded that the Commission had failed
to demonstrate that the market for market data was competitive based on
the reasoning of the Commission's NetCoalition order because, in the
court's view, the Commission had not adequately demonstrated that the
Depth-of-Book data at issue in the case is used to attract order flow.
NASDAQ believes, however, that evidence not before the court clearly
demonstrates that availability of data attracts order flow.
Competition among platforms has driven NASDAQ continually to
improve its platform data offerings and to cater to customers' data
needs. For example, NASDAQ has developed and maintained multiple
delivery mechanisms (IP, multi-cast, and compression) that enable
customers to receive data in the form and manner they prefer and at the
lowest cost to them. NASDAQ offers front end applications such as its
``Bookviewer'' to help customers utilize data. NASDAQ has created new
products like TotalView Aggregate to complement TotalView ITCH and/
Level 2, because offering data in multiple formatting allows NASDAQ to
better fit customer needs. NASDAQ offers data via multiple extranet
providers, thereby helping to reduce network and total cost for its
data products. NASDAQ has developed an online administrative system to
provide customers transparency into their data feed requests and
streamline data usage reporting. NASDAQ has also expanded its
Enterprise License options that reduce the administrative burden and
costs to firms that purchase market data.
Despite these enhancements and a dramatic increase in message
traffic, NASDAQ's fees for market data have remained flat. In fact, as
a percent of total Subscriber costs, NASDAQ data fees have fallen
relative to other data usage costs--including bandwidth, programming,
and infrastructure--that have risen. The same holds true for execution
services; despite numerous enhancements to NASDAQ's trading platform,
absolute and relative trading costs have declined. Platform competition
has intensified as new entrants have emerged, constraining prices for
both executions and for data.
The vigor of competition for Depth-of-Book information is
significant and the Exchange believes that this proposal itself clearly
evidences such competition. NASDAQ is increasing the fee in order to
keep pace with changes in the industry and evolving customer needs.
This product is entirely optional and is geared towards attracting new
customers, as well as retaining existing customers.
The Exchange has witnessed competitors creating new products and
innovative pricing in this space over the course of the past year.
NASDAQ continues to see firms challenge its pricing on the basis of the
Exchange's explicit fees being higher than the zero-priced fees from
other competitors such as BATS. In all cases, firms make decisions on
how much and what types of data to consume on the basis of the total
cost of interacting with NASDAQ or other exchanges. Of course, the
explicit data fees are but one factor in a total platform analysis.
Some competitors have lower transactions fees and higher data fees, and
others are vice versa. The market for this Depth-of-Book information is
highly competitive and continually evolves as products develop and
change.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\9\ At any time within 60 days of the filing
of the proposed rule change, the Commission summarily may temporarily
suspend such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
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\9\ 15 U.S.C. 78s(b)(3)(a)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2013-142 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2013-142. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the
[[Page 72744]]
proposed rule change between the Commission and any person, other than
those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room on official business
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for inspection and copying at the
principal offices of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NASDAQ-2013-142, and should be submitted on or before
December 24, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-28845 Filed 12-2-13; 8:45 am]
BILLING CODE 8011-01-P
